European stocks break 3-day winning run, deepen losses for 2016

Europe’s benchmark stock index deepened its loss for the year on Thursday, breaking a three-day winning streak as banks continued lower.

The Stoxx Europe 600 index
SXXP, +0.16%
dropped 0.4% to end at 360.26, after closing at the highest level since Dec. 31, 2015 on Wednesday. As of Wednesday’s close, the index was just 2.76 points from entering bull territory, following a seven-week rally that was triggered by Donald Trump’s unexpected win in the U.S. presidential election. A bull market is defined as a 20% rise from a market bottom.

However, for the full year, the pan-European index remains set for a 1.5% loss, with banks pulling the index lower. The financial sector plunged in the beginning of the year on worries over the impact from negative interest rates, slow growth and nonperforming loans.

BNP Paribas SA
BNP, +1.33%
which is also under investigating for the bond sale, fell 1.3%.

Shares of embattled lender Banca Monte dei Paschi di Siena SpA
BMPS, -0.12%
were still halted for trade. The stock has been suspended since Dec. 23 when the Italian government agreed to bail out the bank after the lender admitted it had failed to raise the €5 billion ($5.23 billion) as part of a last-ditch rescue plan.

Economic news: Lending to households picked up 1.9% in November, up from 1.8% in October according to data from the European Central Bank. Loans to firms grew by 2.2% last month, versus 2.1% in October.

“A pleasing set of news for the ECB,” said Howard Archer, chief European and U.K. economist at IHS Global Insight.

“The data fuel belief that the ECB is unlikely to make any adjustments to monetary policy for some considerable time to come,” he added.

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